Before delving on what a debt management plan can do for you as an individual or as a business, it will be lovely to pick its scope. It is a misconception among plenty of people that debt management designs can only be used for eliminating the existing mound of debts. Nevertheless, debt management designs have an extended scope. As the name suggests, debt management designs may be used with advantage to manage the debts to a specific level. It must be acknowledged that a proper management of debts makes debt consolidation and other methods employed to fight the menace of debts superfluous. Prevention is better than cure. Most of us repeat the adage incessantly. It will be through debt management designs that one can create the habits in ones life and dealings.
However, the role played by debt management designs in working with the debts already incurred may not be discounted. Plenty of people owe their financial survival to the debt consolidation loans that helped them counter bankruptcy and other debt related issues.
The author has tried to illustrate the preventive as well as defensive makes use of of debt management designs through this article. Since the defensive part of the debt management plan is more widely used, they will first discuss the various designs to deal with debts that an individual or business has already incurred. The various debt management designs that come in this section are as follows:
• Debt consolidation loans
The most conventional technique of dealing with debts is debt consolidation loans. Debt consolidation loan is fundamentally meant to arrange simple finance for clearing the mound of debts. A single loan is drawn after consolidating the various debts. One aspect that distinguishes debt consolidation loan from other loans is that the borrower gets help and guidance from the debt consolidation loan provider in the settlement of debts. Specialist negotiation skills and a proficiency in debt settlement recommend the services of the debt consolidation loan provider in this regard.
• Debt consolidation mortgage
Debt consolidation mortgage constitutes a major part of the debt management designs. A debt consolidation mortgage is fundamentally a second mortgage. In this technique, the borrower requests the mortgagee who holds the first mortgage to the home to repay his debts. In exchange, the borrower includes the debts while making the every month repayments. The advantage of the debt management plan is that finance is available for debt consolidation at rates equivalent to a mortgage, i.e. at cheap rate of interest.
• Debt consolidation through remortgage
While debt consolidation mortgage entails dealing with the same mortgage lender, debt consolidation through remortgage involves shifting to a mortgage lender who offers a better rate of interest. In this debt management plan, the borrower or the mortgagor requests the new mortgage lender to include several debts along with the unpaid amount on the original mortgage for disbursement. Again, this will help the borrower get cheaper finance for debt consolidation at the rates of a mortgage.
• Debt consolidation through credit cards
Credit card as a debt management plan will be useful when the debtor desires a faster settlement of debts. As in loans and mortgages, a credit card user require not wait for the debt management plan to be approved and sanctioned. Another advantage of credit cards as a debt management plan is that borrower is not necessary to pledge any of his/ her assets to back the loan. This can however be expensive for the credit card user.
• Debt consolidation through home equity loans
Home equity loan is a secured loan taken against the equity in ones home. Home equity loans put a convenient technique of debt settlement. A home equity loan is a multipurpose loan that can be used with equal advantage whether in a debt management plan or for making home improvements. Since home equity loan is secured, it provides cheaper finance. However, the borrower needs to be regular in making repayments to protect his house from repossession.
• Debt consolidation through debt settlement
This type of debt management plan involves associating with a debt settlement company. The debt settlement company undertakes to repay the debts while the debtor repays the amount through little every month installments to the debt settlement company.
As discussed above, the preventive methods are equally important tactics employed to avert the occurrence of debts. Debt counselling aims to impart debt management training to individuals as well as businesses. People are taught the manner in which to manage their revenues. Plenty of of the tips provided as a part of the debt counselling techniques are time worn. The objective of debt counselling is not to recall these techniques, but to help people through innovative ways and means to employ these techniques in their life.
The defensive debt management designs having repaid the debts, do not give sufficient guarantee of the menace of debts not raising its head again. There is a necessity to finish the cycle of the debts, and the preventive part of debt management designs will be helpful on this count.
However, the role played by debt management designs in working with the debts already incurred may not be discounted. Plenty of people owe their financial survival to the debt consolidation loans that helped them counter bankruptcy and other debt related issues.
The author has tried to illustrate the preventive as well as defensive makes use of of debt management designs through this article. Since the defensive part of the debt management plan is more widely used, they will first discuss the various designs to deal with debts that an individual or business has already incurred. The various debt management designs that come in this section are as follows:
• Debt consolidation loans
The most conventional technique of dealing with debts is debt consolidation loans. Debt consolidation loan is fundamentally meant to arrange simple finance for clearing the mound of debts. A single loan is drawn after consolidating the various debts. One aspect that distinguishes debt consolidation loan from other loans is that the borrower gets help and guidance from the debt consolidation loan provider in the settlement of debts. Specialist negotiation skills and a proficiency in debt settlement recommend the services of the debt consolidation loan provider in this regard.
• Debt consolidation mortgage
Debt consolidation mortgage constitutes a major part of the debt management designs. A debt consolidation mortgage is fundamentally a second mortgage. In this technique, the borrower requests the mortgagee who holds the first mortgage to the home to repay his debts. In exchange, the borrower includes the debts while making the every month repayments. The advantage of the debt management plan is that finance is available for debt consolidation at rates equivalent to a mortgage, i.e. at cheap rate of interest.
• Debt consolidation through remortgage
While debt consolidation mortgage entails dealing with the same mortgage lender, debt consolidation through remortgage involves shifting to a mortgage lender who offers a better rate of interest. In this debt management plan, the borrower or the mortgagor requests the new mortgage lender to include several debts along with the unpaid amount on the original mortgage for disbursement. Again, this will help the borrower get cheaper finance for debt consolidation at the rates of a mortgage.
• Debt consolidation through credit cards
Credit card as a debt management plan will be useful when the debtor desires a faster settlement of debts. As in loans and mortgages, a credit card user require not wait for the debt management plan to be approved and sanctioned. Another advantage of credit cards as a debt management plan is that borrower is not necessary to pledge any of his/ her assets to back the loan. This can however be expensive for the credit card user.
• Debt consolidation through home equity loans
Home equity loan is a secured loan taken against the equity in ones home. Home equity loans put a convenient technique of debt settlement. A home equity loan is a multipurpose loan that can be used with equal advantage whether in a debt management plan or for making home improvements. Since home equity loan is secured, it provides cheaper finance. However, the borrower needs to be regular in making repayments to protect his house from repossession.
• Debt consolidation through debt settlement
This type of debt management plan involves associating with a debt settlement company. The debt settlement company undertakes to repay the debts while the debtor repays the amount through little every month installments to the debt settlement company.
As discussed above, the preventive methods are equally important tactics employed to avert the occurrence of debts. Debt counselling aims to impart debt management training to individuals as well as businesses. People are taught the manner in which to manage their revenues. Plenty of of the tips provided as a part of the debt counselling techniques are time worn. The objective of debt counselling is not to recall these techniques, but to help people through innovative ways and means to employ these techniques in their life.
The defensive debt management designs having repaid the debts, do not give sufficient guarantee of the menace of debts not raising its head again. There is a necessity to finish the cycle of the debts, and the preventive part of debt management designs will be helpful on this count.
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